And welcome everyone to another Smart Money Circle episode. I'm Adam Sarhan. With me today is David Kang, who's the Chairman and CEO of At the Center Squared, which manages approximately $4 billion in AUM or assets under management. David, thank you so much for taking the time and welcome to the Smart Money Circle. Yes, thank you, Adam. Definitely a pleasure. So David, I always like to begin. Can you please tell us your story and how you got to where
you are today? You know, I have to say I started my financial career with boring insurance, Northwest Mutual Life. I was a college agent and I guess that's, you know, I like things simple. You know, I sold annuities, I sold life insurance policies and it was great because I put all my money into annuities and I got a coupon. So as a young kid in college, it's always nice to think about passive income.
So I started really, really early, then kind of transferred over to Morgan Stanley Dean Witter. I was a private wealth and portfolio manager out there.
Kind of did a little stint with her family business dealing with apparel, women's apparel, manufacturing, distribution, wholesale and got went back and got my MBA from UC Irvine Mirage School of Business. And from there, it was one of the situations where colleagues, friends that I knew very well from the days of Morgan Stanley, you know, we've been keeping in touch for decades, right? And we decided if we don't try to do something and do something up on our own at this age, we're
going to get too old. So tip the risk and lo, lo and behold. It worked out. It worked out. Yes, yes, yes, absolutely. Love it. All right, David, let's ask about your business. How do you tell us about the Santa? Tell us about your investment strategy? Anything you want to share there please? Yeah. I mean, again, traditionally it's fixed income. We've got a core, core plus high yield IG Gov cred, you know, all US fixed income securities our our strategies.
So I bought Dusenta from Bradford Marzek. They started in 1984. They sold to Tortoise Torto credit strategies And you know, I took over in 2020 with the mindset of, OK, there needs to be another fixed income management firm. The timing seems right.
During that time it was COVID, so it was very risky, you know, from overall personnel, staffing, being able to keep compliant, obviously the most important, but that you know, the firm that we acquired had a nice 40 year track record and those opportunities really don't come that often, right? So with regards to the strategies, you know, since 2020, it's really been all about rebuilding, rebuilding, rebuilding, maintaining maintenance of the portfolios,
reposition of the portfolios. And I think the most important thing is really restaffing the main people at the firm for the next 10/15/20 years. Makes sense. Yeah, makes perfect sense. So from a fixed income standpoint, for the audience, for them to understand there's equities and there's fixed income. Can you please elaborate a little bit, let people know you're generating income, how it works, What are some type of fixed income investment you look at? So on and so forth. Yes.
I mean, I think everyone has the equities account mutual fund, everyone is somewhat familiar with that. You know, people assume fixed income is extremely easy or boring to say the least, but when you look at fixed amount, you got to look at debt, you know, hence fixed income.
What you're doing is buying either government debt, you're buying corporate debt or buying pools of debt that consumers will borrow, whether from banks, from origination shops ranging from mortgages all the way down to your car loans, etcetera. The when you look at fixed income, I think, you know, going back to when I was in college, the passive income element is what's that always attracted me to it. It's consistent, it's manageable. And you know, I'm not a big stock picker, right?
You know, sometimes, you know, picking stocks, it gets pretty nerve wracking from time to time. I like consistency. I like steady, I like, you know, our, our idea of a home run is outperforming the benchmark by 5200 bits. Makes sense. Yeah, got it. So let's talk about risk. You mentioned risk and it could be nerve wracking. Was a nice way of saying it. I like your your nerve wracking approach. That's be you're being nice.
So how do you handle risk and what are some mistakes you see people make with respect to risk management? I think you know to address that question, the biggest driver and or contributor in our ability to manage risk is technology. And you know when I first started Morgan Stanley it was really about, OK, let's buy a mini bond for an ultra high net worth individual and let him take care of the tax benefits
that it offers. Then you deal with sovereign debt, whether it's AUS, Europe, Asia, Japan, etcetera, it's you're really buying sovereign, meaning, you know countries around the world that that, that they issue. And in fixed income the common terminology is are we getting paid for the risk, right, right. So now going to risk, you know, I think the most important thing is really about what kind of risk analytic reports does, what does or what the common investor
really do, you know, generate. You've got multiple drivers here, you've got macro drivers, you've got micro drivers. You know, you kind of have to go through the list in terms of the process of assessing risk, OK, what's a geopolitical risk in terms of the debt? It's, you know, bonds are relatively simple in terms of directional returns. When interest rates go down, bond prices go up. When interest rates go up, bond prices go down.
Prices meaning the value of the bond at that time of that interest rate. But Morrison turned to risk, you know, because we live in a very global debt market as well as equity market. The ability to assess risk, utilizing technology, utilizing AI, utilizing and imploring people that understand the technology and the data that's out there, and then get to a point of simple simplifying what directional positioning needs to be right. So I'll give an example from a staffing resource.
Before we would hire research analysts. Now we develop desk analysts and furthermore we hire data scientists in conjunction with our PMS to assess risk going
forward. You know, we live in the age of, of enormous amount of data and if you don't have an embrace of technology, then your risk assessment, your risk management as well as understanding, like I said, we're trying to outperform by 50 bits or 100 bits and, and those risk reports are, are extremely crucial, especially more so in the age of technology data and so forth more than ever. Yeah, I love that. So I love what you're saying
here. And this is the first time we meet, first time we speak, but I built something called marketterminal.com, which is my version of a Wall Street terminal for that exact reason to help people simplify the data so it's not overwhelming. And the big conclusions that, you know, use terminals. So why not have everyone else? But I, I love what you're saying here.
So use the technology as a tool to quantify the risk and make sure the risk versus return the reward and all that fun stuff to instead of it just being overwhelming or TMI or whatever it is with data, right? You can just draw data. I love that. OK, moving on to my favorite part of the show, which is timeless advice.
So let me ask you some questions about first question is timeless lessons you've learned along the way that you'd like to share with the audience, about business, about relationships, anywhere you want to go. I think you know, more so than ever, I think with regards to timeless lessons where the business is ultimately it comes down to we're still in the
people business, right, right. I think we if we embrace technology and use technology appropriately, it gives us more time to interact with our friends, colleagues, you know, people that we care about and you know, ultimately helps us do our job efficiently and with less, I want to say stress,
right. So, and given that, I think, you know, the lessons I've learned overall from Northwest Mutual Life, Morgan Stanley, Dean Witter, you know, a little stint with entrepreneurship, with apparel business and, you know, developing a financial company has always been have a goal, always position, always assess that position and always don't be afraid to reposition it. Don't be afraid to be wrong, but
learn from why you were wrong. And it fundamentally comes down to is mindset and always kind of considering not only your perspective, but also with regards to drivers, people, markets. You know, it's really about one thing that I've learned over these years is it's really not about me anymore, right? Yeah, right. Me too. I couldn't with you more. Once you get to a certain level, yeah, for sure you want to get back, you want to help others and all that see their success.
Exactly. So, you know, at this stage, you know, I've got a handful of really strong staffers that are really committed, right. They're in the office 3/4 in the morning, they're in the office till 345 in in the evening. So it's really about OK, great. I've I've got a solid staff, committed staff. How can I help them develop their wealth, right? And hence it's the perspective.
It's not about me anymore. It's about how can I help the guys that are committed, the guys that are have spent the time the the guys that have sacrificed their lifestyle and really committed to the choice of them being a very high grade, high standard type of portfolio manager. And you know, like I said, it's it's with success comes, I think definitely requires success. Shun. I love that. I love that.
Right. So, you know, and a large point, I think, in terms of my overall success really stems from being a single parent. So I raised my daughter. Actually, let me rephrase that. I was your chauffeur. I was reclaiming. I was the counselor. You know, it really helped me multitask. It really helped me develop high management. It really helped me focus on what is important in life. And and you know, I have a very, very learning mindset. You know, I'm going to be the first one.
I tell you, I'm going to get most of most of everything wrong. But whatever I get wrong, I will make sure I get it right or learn from it. Yeah. So, so and we basically take that approach to our overall portfolio management, right? Yeah, we're not going to be perfect. We're going to position on the tail end, position on the front end. We're going to basically pick industries. We're going to pick the wrong
industries. But at the same time, if you're understanding why the performance was a little subpar this month or this quarter, you learn from it and you learn from it and you reposition it. Yeah, I, I love that a lot of similarities. Again, it's how I want to help my team, how I help them get put the a a players on the field and give them every possible thing I can do to help them be successful. I, I love that the the child part. I have children too and, and
taking care of them. It's it's endless giving opposed to taking and it's not about me anymore. I love what you're saying here. All right, let's ask you the flip side of this, David. What are some timeless mistakes either you've made, you've seen other people make, and how do you learn from them so you don't repeat them?
I think #1 is hubris above all. Yeah, you know, and the the hubris element of, of finance and or entrepreneurship and or success, you definitely need people around you that's going to keep you grounded. Definitely. And it helps having a teenage daughter. By the way, A. 100% I. Mean 100. Percent, yeah. She's going to reject, she's going to basically tell me how it is. And I'm going to tell you right now she's going to be always
right. And I think that the the hubris element of success is the most detrimental to sustaining success. And I think that's why, you know, starting, you know, when we did the acquisition in 2020, it was really about OK, success, success, success, performance, performance, performance. Eventually in 2023-2024 we got to a point of being able to integrate, you know, successive staffing, technology implementation.
You know, we don't want to toot our own horn, but 2024 we're in the top this out in terms of performance of one of our strategy. So I think it's really about the hubris element, understanding, respecting each other, really saying that yeah, it's not about me, it's about the team, it's
about the company. I want everyone to succeed to within their wheelhouse, right, within what they envision successes and, and people are all different, you know, I'm sure, you know, with with all the different companies that you're doing and the people you meet and the people that you interview, you're seeing such a jambalaya of different people,
right? You're seeing people from this background, that background understanding there's other people from the hedge fund industry, there's people from, you know, portfolio management, private equity. So you know, understanding who are you dealing with? Understanding, you know, the position of the staffing to support sustainable performance success and, and keeping it interesting, right. I think, you know, overall that's kind of what I try to maintain and and that goes the
same for myself. I like to keep it interesting. I like to keep, I really care about the people that, that I work with, understanding their position, but trying to help them balance out their lifestyles and, or career pursuits. And, and you know, one of the things that we actually do a lot here is really about culture, right? You know, we have a theory. Depending on where you stand in terms of your sibling and or only child, there are certain character tendencies people
have. So with that in mind, you know, sometimes the last child is somewhat of a diva. So you take the diva and put him in a position of sustainable performance. You've got the oldest child, he's the go to guy. He's the guy that's always going to be there. Put him in a position of dependency, the the other staffing, other people, they're going to look to him day in and day out, week in, week out.
So understanding people's cult, you know, behavioral in line with cultural as well as their situation lifestyle, I think is our primary focus and and that helps alleviate any buying or thinking of hubris and continue to engage people, right. Yeah, that makes perfect sense. I love that. So let's talk about leadership as a leader. What makes a great leader? What are some lessons you've learned about leadership that you'd like to share with the
audience? Definition of leadership, if you really think about it, if you're a one man shop, you're not going to be a leader, right, right. Fundamentally, you know, I always tell my guys kind of spinning off in terms of overall mindset with regards to financial success, right? It's easier to earn an extra $10,000 than to save it, right? So these are the little quotes I say little kind of, you know,
reminders to my staff. And I think it's, it's a leader is spending the time every day, every week, every month to ranging from having someone on the back, ranging from, you know, critiquing his performance, ranging from, you know, complimenting him or her or, and, or critiquing or, or, you know them. And fundamentally, I think, you know, like I said earlier, you can't be the leader by yourself.
So you have to genuinely. I think care, I think you have to genuinely, really listen and genuinely carry a conversation. And I think it goes back to me raising my daughter. I love that no it. Was so powerful. Right. So if you don't genuinely care and don't listen to your daughter, trust me, they're
going to know. Yeah, in maintaining the attention span, maintaining, you know, their point of view and, you know, kind of circles back to the initial is, yeah, it's not about me. And you know, and I think being a leader has changed so much. You know, I mean, when I was working at Northwest Mutual, Morgan Stanley, being leader was all about, OK, I'm the boss, you do what I need done and you're
my team member. No, I think leadership's kind of evolved where it's about, OK, when we're working together, I'm part of a team, but it's really about positioning, guiding and always kind of creating a little momentum with regards to people's in a perspective, mindset, a little attitude as I think the forceful leadership is really dissipated now. Yeah. They create 100%. Yeah. OK.
Thank you for that. Final question for you today, David, is what is the best piece of advice you want to give the audience or? Your. 30 year old self. Wow, that's a toughie. Start with a 30 year old self. I would say wake up earlier. Love it right? You don't know everything. I I think it's really because of technology nowadays you have to listen to everyone. You have to actually spend time listening to, you know, your grandparents, your parents, you have to listen to your your 10
year old niece. You got to listen, you know, really kind of think about and digest from their perspective, right. And I think from a given that I think it really helps develop or round out a personal personality number one. And I think it's really about no matter, you know, before doing this interview, I kind of looked at my old resume CV and you kind of think about, OK, wow, I've
done a lot of work here. I think people need to actually be able to critique themselves as rational people more so and kind of understand, OK, when I look at this first name, what did I get out of this shop, right? What did I learn from this shop? And, and seeing that development
is a thing is very productive. And you got to really take the time to kind of take, take some time, look at the experiences that you went through either at Northwest Mutual, Morgan Stanley, you know, in college and really think about, OK, my position correctly, you know, does my resume entail
progression to the goal? I think more people, more and more people I think need to really assess their resume from the perspective of their goal and be able to rationally kind of assess the different risks that they're exposed to, right? And whether it's portfolio management, whether it's raising a daughter, whether even doing this interview. I'm not perfect and I'm OK with that. But at the same time, there's a lot of things I'm proud of. Yep, makes. Perfect.
Yep, makes perfect. So I think success is different for different people in, in in financial industry, it's really about competitive performance. It's about you know, fee generation, P&L generation, absolute return. I think you know, and going back to the resume you want to assess whether or not is my professional standards getting that much better with every job and what is that standard,
right. So I think for in in, you know, there's a lot of younger people from, you know, my undergrad and so forth that, you know, they would ask me for advice. They would ask me how do I get to the point you're at? And I would say, you know, I'm not even sure where I'm at. I'm just enjoying the people that surround me making the most of it. And as a byproduct, I got successful. That's right. Yeah, super powerful. Well, David, thank you so much
for taking the time. Congrats on your success and this was absolutely fantastic. Thank you. Thank you, Adam. Definitely a pleasure.